The primary purpose of this blog (Prithviraj Kothari - MD, RSBL | Bullion market blog) is to educate the masses of the current happenings in the Bullion world.
This blog contains my opinion, which is not to be construed as investment advices.
Information provided in these blogs is intended solely for informative purposes and is obtained from sources believed to be reliable

Tuesday, 31 January 2017

Gold prices crawled higher on Monday on a weaker dollar and as uncertainty over US policy under President Donald Trump stoked safe-haven demand, although gains were curbed with many in Asia on holiday for the Lunar New Year, said Mr. Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited.

Spot gold had edged up 0.1 per cent to $1,191.98 per ounce by 0735 GMT, while US gold futures were up 0.24 per cent at $1,191.2.

Trump's administration on Sunday tempered a key element of his move to ban entry of refugees and people from seven Muslim-majority countries in the face of mounting criticism and protests in major American cities.

Some of Trump's statements and a lack of detail on policy have led some investors to opt for gold, often seen as an alternative investment in times of geopolitical and financial uncertainty.

The executive order signed by Trump has raised the uncertainty even higher.
The upturn in safe-haven buying comes at a time when physical demand has been sapped due to the Lunar New Year holiday in Asia, added Kothari.

The dollar index, which measures the greenback against a basket of currencies, was down 0.12 per cent at 100.410.

The market for the precious metal has also been buoyed by sluggish US economic data released on Friday.

Economic growth in the country slowed sharply in the fourth quarter as a plunge in shipments of soybeans weighed on exports, the data showed.

"That puts just enough doubt into the industry's mind about the timing of (US interest) rate hikes," Hynes said.

Meanwhile, holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD, remained unchanged on Thursday from Wednesday.

Speculators crimped their net long position in gold futures and options, following two straight weeks of increases, data showed. They also raised their silver holdings to the highest since early November.

Spot silver was up 0.23 per cent at $17.16 per ounce.

Platinum shed 0.14 per cent to $980.75 per ounce, while palladium dropped 0.5 per cent to $732.4 per ounce. Palladium touched its lowest since Jan. 4 at $708.97 an ounce in the previous session.

Economic Survey 2017: India’s economy will grow in the range of for the current financial year 2016-2017, says the Economic Survey that was tabled in the Parliament today. The survey projected growth for FY18 in the range of 6.75-7.5%.

Managing Director of RiddiSiddhi Bullion Ltd, Mr. Prithviraj Kothari has said that the cash ban move (demonetisation) can serve to be a risk to the growth forecast. The survey also cautions that a rise in oil prices would also be a risk to the growth forecast. The GDP growth rate at constant market prices for the current year i.e. 2016-17 has been placed at 7.1 per cent.

The Economic Survey is the Finance Ministry’s ‘health report card’ for the economy in the current financial year. Prepared by the Chief Economic Advisor, Arvind Subramanian, the economic survey gives an insight on the economy’s growth prospects, external factors that impact GDP growth, and the way ahead for policy focus. The Economic Survey comes a day ahead of the Budget 2017, which will be presented by Finance Minister Arun Jaitley.

This time, in a first, the Budget will be presented on February 1, as against the last date of the month. Also, this time Railway Budget will be presented as a part of the main Budget, added Kothari thereby hoping that an hefty investment shall be made by the Government towards Gold mining along with reducing the corporate taxes.

Wednesday, 23 November 2016

While we saw palladium diverged last week, gold prices remained weak. The strong dollar has been weighing on the yellow metal, but a stronger oil prices may well give it some support if stronger oil prices encourages investors back into commodity baskets.

Last week gold was on the negative side as its prices tracked lower in London on the morning of Friday November 18, with continued strength in the dollar pushing it to six-month lows.

The spot gold price was recently quoted at $1,208.45/1,208.70 per oz, down $6.55 on Thursday’s close. And reached $1203 earlier in the day -it’s lowest since May.

The dollar index was recently at 101.35, up 0.35% – it is holding around its highest for 14 years amid expectations that the US Federal Reserve will raise interest rates next month.

The US dollar has strengthened alongside increasing expectations of a US rate hike in December.

Fed officials who spoke last Friday had indicated that rates should go up next month and that the Fed could adjust its outlook as and when more details of president-elect Donald Trump’s policies become visible,.

“The market is almost fully priced for a rate hike in December at 98%.

Bullion has fallen 5.4 percent this month as of Friday&#39;s close, pressured by nerves around the U.S. election and speculation over the timing of an interest rate hike by the Federal Reserve.

The overnight Fed comments gave the dollar the support required to continue its stunning run higher and it is hard to see gold being able to rally the support required to break away from $1,200 as we head toward the December FOMC meeting.

US Federal Reserve chair Janet Yellen said that US interest rates could rise “relatively soon” due to an improving domestic labour market and stronger growth.

Should the US dollar continue to rally, gold is likely to remain under pressure.

These low prices have induced some interest in the physical market this increasing the demand for gold. Russia purchased the most gold in 18 years in October – central bank holdings rose to 50.9 million ounces from 49.6 million ounces, ANZ said in a note.

Gold prices rose in Asian trade on Monday, snapping a 3-session losing streak, buoyed by physical buying after the metal slid to a 5-1/2- month low on Friday.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Hence any positive development over the interest rate hike immediately puts pressure on gold this pushing its prices down

Meanwhile, gold premiums in India, the second largest consumer of the precious metal, jumped to two-year highs in the week to Nov. 18 as jewellers ramped up purchases on fears the government might curb imports after withdrawing higher-denomination notes from Circulation.

Spot gold seems to have found a support at $1,204 per ounce; it may hover above this level for one day or bounce moderately.

Gold moth continue to struggle against a backdrop of a firmer U.S. stock market, a stronger dollar and rising global rates and there are chances for prices to weaken below $1,200 in the next few weeks leading into the Federal Open Market Committee.

But ETF investors are continuing to pull out – holdings have dropped by 54 tonnes or 2.5% to 2,109 tonnes as of November 18 after rising 33 tonnes in October, 27 tonnes in September and 16 tonnes in August.

With US markets set to close later this week for Thanksgiving holidays, volatility is likely to be pronounced into the end of the month, Commerzbank noted.

Saturday, 12 November 2016

This was one of the
boldest movements by the Government of India announced over a 40-minute
speech. In one of the historical reforms of the economy of India, Rs 500 and Rs
1,000 notes were banned effective Tuesday midnight which is expected to bring in 7 lac crore in the RBI account.

The entire team at RiddiSiddhi Bullions ltd. supports this brave move of Our Respected PM Mr. Modi. We assure complete support for the successful implementation of these measures to fight corruption and illicit financial flows in India. The majority
of industry and commoners alike reacted to this decision with
overwhelming support and we at RSBL will extend total cooperation for it. Our aim is to have a "black money free India".

Tuesday, 8 November 2016

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House.

Gold markets thrive
on uncertainty, it usually does before US elections. But this time
around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win
is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies show that as the dust settles, the
year following the elections could be bad for gold prices.

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House.

Gold markets thrive
on uncertainty, it usually does before US elections. But this time
around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win
is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies show that as the dust settles, the
year following the elections could be bad for gold prices.

Thursday, 3 November 2016

Buying gold
and silver is considered to be auspicious in most of the festival especially on
Akshay Tritiya, Dussehra, Dhanteras and Diwali. Even jewellers project
gold in different manner during festival season. Jewellery houses offer
attractive discounts and other such schemes to lure the customers. Some have
gone a step further and are offering discounts on the making charges as well.

We usually
hear in advertisement that “Diamond is forever” but for Indian market if we see
craziness about gold than for us “Gold is forever” seems to be the apt
statement.

A historical analysis
shows that largely on the day of Diwali, gold prices witness a correction, while
the price increase actually takes place around two weeks prior to the festival.

Generally I have always
been asked what are your projections for Diwali, how does the market look etc.
But this year I have put across a post Diwali gold analysis from 2011- 2016. Let’s
have a look.

Diwali 2011- Gold prices ended steady at INR 31,300 per
ten grams in special Diwali trading on 26th October, on selective buying, while silver fell by INR
150 to INR 49,000 per kg on reduced off-take.Traders said the gold remained steady on
token buying by market participants to mark the beginning of new Hindu Samvat
year 2070, while silver declined on lack of support.

They said buying activity was restricted and
the volume of business limited. Gold buying in
India, the world's biggest buyer of the metal, tapered off further after the
festival week, even as domestic users started getting small import lots,
weighing on premiums.India, struggling with a high trade deficit
and weak currency, had been trying to curb demand for gold, the second-biggest
import item after oil. It has made gold expensive for consumers by
setting a record 10 percent import duty and made supplies harder to come which
kept gold more or less stablisied.

Diwali 2012-
Generally, gold sales remain good throughout year but when festival season
starts gold breaks record in terms of purchase demands in India. Its seems to
be true for 2012 too. Although gold price was nearby INR 32,000/- per 10 gm. on
Dhanteras, it did not affect the demand and the craze to own the yellow metal
continued. Gold is considered as safe haven. Gold investment also helps in bad
financial situation that is the reason people don’t hesitate in purchasing gold
even at higher price.

Once again
this year people showed added interest in purchasing Gold. That is the reason
country’s top two exchanges BSE and NSE recorded a total turnover of over INR
2,200 crore in gold ETF on Dhanteras and simultaneously demand for gold coins
and bars as also high.

Although
Gold was trading at a record price of INR 32,000 per 10gm. Investors were still
investing in gold because they knew that investment in gold is secure as it
gives return like 670% in 10 years which is difficult to achieve from other
asset class and it was a life time high in 2012 which kept the faith of investors
in the yellow metal alive

Diwali 2013- Since 2013 was one of the worst performing
years for gold, the demand for it declined too. In the domestic bullion market shows that demand had
slowed drastically as compared to the last festive season. Gold prices were
trading at levels of around

Rs30, 000/10gm and this
factor to a great extent is seen as having a dampener effect on demand for gold
jewellery. While compulsive gold shoppers would yearn to buy gold coins and
bars, because of the tight supply conditions they may not be able to do so.

A firm global trend on speculation that the US Fed might maintain stimulus to
boost economic growth also supported the sentiment, they said. On the other hand, jewellers
were seen offering discounts on making charges in order to lure buyers. Then
too, sentiments doing rounds in the gold market are on the weaker side for 2013
thus affecting big purchases among the
small to-middle income group category

Diwali 2014-Gold sales in India during the
festivals of Diwali and Dhanteras celebrated this week rose by about a fifth, a
senior official at the country's biggest gold trade group said
Premiums in India, the second biggest buyer of bullion, jumped to $17-$18 an
ounce during Diwali.Diwali sales across the country were very good. It was
about 20 per cent higher compared to 2013.The
strong demand from India was supporting global gold prices.India set a record high import duty on gold last year
to curb its trade deficit, and made it necessary for importers to re-export a
fifth of all their purchases. The move contained imports into the country, with the
resulting supply shortage sending local premiums to about $160 an ounce over
the global benchmark at one point.Some of the rules were eased earlier this year,
leading to higher imports and a fall in local prices.This year prices were low, sentiment was good and there
was a stable government in the centre;
all of these helped boost sales. In anticipation of strong demand during the
festivals, India had imported $3.75 billion worth of gold in September - a 450
per cent jump from the same period last year.

India last year levied a record import duty
of 10 per cent on gold and introduced the 80:20 rules after surging trade and
current account deficits sparked the worst currency turmoil since the 1998
balance of payment crisis.

But instead of putting in place more
restrictions, the government surprisingly scrapped the so-called 80:20 rule in
the previous month, mandating traders to export a fifth of all imported gold.
Traders had few takers for the gold they bought in November.Trading agencies were expecting curbs on
imports and subsequently higher premium in December. So they imported more than
their requirement but were then struggling to find buyers.

Diwali 2015-
Rising for the second straight day, gold prices edged
up by INR. 5 to reach INR. 26,235 per 10 grams on the eve of Diwali that fell on November 11.The bullion market witnessed increased buying by jewellers to meet festive and
wedding season demand amid a mixed global trend.

Silver, however, met with resistance and dropped by INR. 535 to trade below INR. 35,000-mark at INR. 34,875 per kg. Traders said sustained buying by jewellers to meet
festive season demand and a better trend overseas mainly kept gold prices
higher.

Diwali 2016-Gold prices drifted lower by INR 100 to INR 30,650 per
10 grams in special 'Diwali Muhurat' trading at the bullion market on Sunday in
the absence of worthwhile activity.

However, silver held steady at INR 43,000 per kg on
scattered buying support from industrial units and coin makers. Traders attributed the fall in gold prices to absence
of activity as jewellers kept buying restricted.

They, however, added that token buying activity on the
auspicious occasion of 'Diwali' and the beginning of Hindu Samvat Year 2073
capped the fall.

Over all, unlike 2012, we did not get to see gold touching
Rs. 32000 mark during Diwali since then. Gold seems to have been steady withing Rs. 25,5000- Rs.30,500 range around the festive season.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Monday, 3 October 2016

Markets
were volatile as the week ended and this volatility was reflected in the
movements of gold prices.

Gold
prices fell on Friday, after shuffling between gains and losses as investors
weighed concern about Europe's banking woes against heightened expectations of
a Fed rate increase in December.

The yellow
metal had fallen to as low as $1,311.95 on Friday – the lowest since September
21 – following news that Deutsche Bank was near a settlement with US
regulators.

Amidst
rise of uncertainty over the health of a financial industry, traders have
shifted focus to gold to provide what it best does- safe haven.

Traders are
seeking for the yellow metal as uncertainty prevails after the news reports by Bloomberg
that 10 hedge funds that do business with Deutsche Bank have pared their
exposure. Its shares fell to a record low, and European and Asian equities
retreated. There’s heightened haven buying as anxiety grows over the German
lender, Australia & New Zealand Banking Group Ltd. said in a note.

Investors
had been nervous about the uncertainty surrounding Deutsche Bank after some of
its clients, among them several big hedge funds, were reported to have
withdrawn securities or cash from the German lender amid concerns about its
stability and their exposure.

But, on
Friday, safe haven demand for gold dwindled after stocks in major markets largely recovered from a
sell-off on easing concerns about Deutsche Bank. This lead to a fall in gold
prices. Spot gold was down 0.3 percent at $1,316.32 per ounce during Friday
trading hours.

As the
session wore on, the focus turned to increasing expectations that the U.S. Federal
Reserve will raise rates by the end of the year. Fed-funds futures, used to bet
on central-bank policy, showed investors assigned a 61.6 % likelihood to a rate
increase in December, up from 52% the previous day, according to CME data on
Friday.

Expectations
for higher rates tend to weigh on gold, which yields nothing and struggles to
compete with Treasury’s and other investments when borrowing costs rise.

Hence
there were sluggish sentiments in the market as it might have to edge lower before
finding firm support.

A collapse in Deutsche Bank's already beaten stock
had sent Europe into a fresh tailspin early on Friday and left world equity
markets slipping towards their worst week in three months. Safe-haven demand
had sustained bullion until the market turned its attention to U.S. economic
data and important numbers coming from China.

The Commerce Department said on Friday that U.S.
consumer Spending fell in August for the first time in seven months while Inflation
showed signs of accelerating, mixed signals that could keep the Fed cautious
about raising interest rates.

Let’s have a look on the key economic indicators-

US

In US
data released Friday, the core PCE price index was as expected at 0.2 percent
but personal spending and personal income undershot at 0.0 percent and 0.2
percent.

The
Chicago PMI was better than expected at 54.2. Revised UoM consumer sentiment
and revised UoM inflation expectations at 91.2 and 2.4 percent respectively
were also better than forecasts.

A string
of manufacturing PMI numbers are due from Eurozone countries as well as the US
later today. The ISM manufacturing PMI, construction spending, ISM
manufacturing prices and total vehicle sales from the US will also be of note.

In US
data released on Thursday, second quarter final GDP growth came in at 1.4
percent quarter-on-quarter, slightly better than expectations of 1.3 percent.
Weekly unemployment claims for last week was also better than expected at
254,000, against a forecast of 260,000.

Pending
home sales for August, however, fell 2.4 percent month-on-month – a 0.1 percent
decline was called for.

China

China’s
official manufacturing PMI for September was at 50.4 (close to expectations of
50.5),